Option Investor
Newsletter

Daily Newsletter, Wednesday, 9/16/2009

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Market's on a Roll, for Now

by Judy Alster

Click here to email Judy Alster
It was a very good day, with green numbers almost everywhere you looked. On broad-based support, the market headed higher for the third straight session to a new high for the year. The S&P 500 saw its best single-session gain in nearly a month, and a gratifying number of prices move into new and higher territory, helped by several generally good economic reports, about which more in a moment. (This column might be showing up in extremely small type. If so, I don't know the cause, but I'll get it fixed.)

MARKET INDEX WRAPUP:

The financial sector did well, up 3.4%. Big movers were multiline insurers, up 5.9%; diversified banks, up 3.1%, and regional banks, up 4.9%.

REGIONAL BANKING INDEX:

Commodities were strong, helping the CRB Commodity Index rise almost 2%. Gold settled 1.4% higher at $1020.20 an ounce and silver, not to be outdone, climbed 2.5% to a new 12-month high of $17.43 per ounce. Oil prices jumped 2.2% and natural gas prices settled 12.2% higher at $3.77 per contract. Natural gas is now up more than 55% from the 7-year lows that were set earlier this month.

DOW JONES INDUSTRIAL AVERAGE:

Maybe it's just me (and if it is, let me know), but I can't help noticing that the MACD isn't making higher highs to strongly confirm the new highs of the Dow. Or the S&P or the Nasdaq. Maybe it doesn't mean much when you're pretty surely exiting a recession, but it's worth keeping an eye on.

S&P500:

NASDAQ:

Helping the Nasdaq along, software pioneer Adobe (ADBE) announced Wednesday that it's acquiring marketing-software firm Omniture (OMTR). Adobe fell $2.25 or 6.3% — it's still at an 11-month high — but Omniture took off, gaining $4.55 or $26.2% to $21.88.

OMNITURE:

There was a seemingly strange drop in the weekly Mortgage Bankers' Association purchase index last week, which monitors mortgage applications. It fell a large 10.3% — but considering that a lot of people may not have been shopping during the Labor Day week, it doesn't look too horrifying. The refinance index also fell; it dropped 7.4% However, a look at the four-week average, useful when containing a short period, shows the purchase index down just 0.4% and the refinance index up 5.2%. Loan rates were mixed in the week with 30-year mortgages up 6 basis points to 5.08% and 15-year and 1-year adjustable rate mortgages down slightly. Despite this report, housing data have been showing real improvement.

We learned today from the Labor Department that consumer prices rose month-over-month in August on a spike in gasoline costs. Even so, the underlying trend shows very modest inflation, mercifully, as we crawl gasping, on all fours, out of recession. The Consumer Price Index (CPI) was up 0.4% percent last month after a flat July; that was still faintly above the 0.3% expectation. You may thank gasoline prices, which soared 9.1% after falling 0.8% the month before.

CONSUMER PRICE INDEX, all inclusive, for AUGUST:

Year over year, though, consumer prices fell 1.5% last month. They've been falling on an annual basis since March, although I'd like you to tell that to my local supermarket who is trying to charge me $1.89 for a head of Romaine lettuce. The consensus seems to be that we're in the part of the economic cycle where "inflation isn't an imminent concern." In the energy component, in addition to the gasoline jump, fuel oil spiked 6.2%, piped natural gas was up 0.4% and electricity actually fell 0.1%. Several factors kept the core rate down: The cash-for-clunkers tax credits helped push prices for new vehicles down by 1.3%, apparel slipped 0.1% and shelter costs were sluggish, notably rent (although see below). Prescription drugs and airline fares were up.

Okay, real quick, a fun refresher on the CPI (you can skip it, but there may be a quiz). You already know that the CPI measures inflation in consumer prices and is used by the Federal Reserve to modify economic policies; it's also used to adjust prices in other economic indicators and to re-evaluate government benefits. It includes the price changes of about 80,000 items purchased by urban households representing around 87% of the population. Sales taxes are included, income tax and prices of investments aren't. (Hmm.) Neither is the sales price of homes; instead, the CPI calculates the monthly equivalent of owning a home, which it derives from rents. (This is somewhat loony, since the CPI is likely to give an inaccurately low reading when home prices are high and rents are low, and an inaccurately high reading when home prices are low and rents are high.)

Two measures of inflation are reported: non-core, which includes everything, and core, which does not include food and energy costs. This is the one the Federal Reserve uses to adjust the Fed funds rate. Is that smart? Many no longer think so, if indeed they ever did. The Fed says it uses core CPI because food and energy are "too volatile" to accommodate the Fed's slow-acting Fed funds-rate adjustments and besides, to get a better gauge of the underlying inflation trend, you should cut those items out. Really? We all remember from Introduction to Statistics that you don't want to contaminate your data, so ignoring outlier results ("Hey, one guy scored 1,000!") is usually acceptable. But are food and energy truly outliers -- especially when they're on a consistent uptrend?

CORE CPI -- no food, no energy:

Some economists say that ignoring them could be understating the inflationary threat. Food and fuel are the very sectors where the ultimate results of a loose monetary policy will become the ugliest and most difficult to reverse.

Anyway, whether the recession, as Ben Bernanke said Tuesday, is "officially over" doesn't matter at all. It's going to feel like a very weak economy for a long time because so many people are still out of work, struggling with mortgage payments, or both. According to more than one analyst, Bernanke was slow to cut interest rates and now he's being too slow to raise them. This easy money is likely to lead to more dollar weakness, probably more gold strength, and right back into inflation.

S&P GOLD TRUST SHARES:

Today's monthly industrial production report shows the manufacturing sector in recovery for two straight months. Industrial production posted a large gain in August, causing more recession-is-over hoopla, especially for manufacturing. Overall industrial production increased 0.8%, following an upwardly-revised 1% boost in July; it came in above expectations of a 0.7% increase.

And in fact, it was from more than rebuilding auto inventories after the cash-for-clunkers boost: Overall production excluding motor vehicles was still up a healthy 0.6% for August after rising 0.4% in July. The motor vehicle component managed to jump a monthly 5.5% in August after July's anomalous 20.1%, utilities rebounded 1.9% and mining output moved up 0.5%.

Year over year, industrial production was up at minus-10.7%, better than July's minus 12.4%. Also edging up from the depths is overall capacity utilization, which hints at more hiring in the future; in August it continued to rise from its recent historical low of 68.3% in June, hitting 69.6% last month and topping expectations.

CAPACITY UTILIZATION:

In more pretty good news, the current account gap, our quarterly international trade balance in goods, service and one-way transfers, narrowed to $98.8 billion in the second quarter vs. the first quarter's revised $104.5 billion. The gap is now (a mere) 2.8% of GDP, down a sliver from the first quarter and the lowest percentage since 1991. A narrowing in the goods & services gap reflecting weakened domestic demand is responsible for the improvement.

I would be a lot happier to see it based on increased foreign demand but for now I'll take what I can get. When outside money is buying your goods and services — that's growth. Manufacturing a lot of your own producer and consumer goods and services — that's also growth. When those two activities stop, so does growth. Look at any country that has ever enjoyed a tremendous growth spurt, and has then stopped growing — start with the U.S. and Japan — and you'll see the correlation. I've held this formula up to the light and turned it every which way over and over again, and there's no denying it.

CURRENT ACCOUNT BALANCE:

Anyway, on the related topic of Treasury International Capital, net long-term inflows of financial instruments into the U.S. were not sensational in July — $15.3 billion vs. a strong inflow in June of a revised $90.2 billion. Net foreign purchases of equities were strong; purchases of corporate bonds and agency debt fell. Net foreign purchases of Treasury notes and bonds were good, with old friends our China and Japan holding up their end. Total flows, including short-term securities, were minus-$97.5 billion compared to June's minus-$56.8 billion. What can you expect from a see-through greenback? I've included the 200-day moving average on this graph to show just how low the dollar has sunk:

THE DOLLAR:

The Energy Information Administration's weekly petroleum status report told of a big 4.7 million barrel drawdown in crude oil stocks last week. At the same time, demand for gasoline was up, showing a 3.5% year-over-year rate of increase. Refineries produced less gasoline in the week but more of other distillates; it may be 82 degrees in the shade but winter will soon be a'comin' in and heating oil supplies, and oil stocks, are set to climbing.

Oil jumped a full dollar to $71.50 in immediate reaction; October light crude closed around $72.40 on the New York Mercantile Exchange. Oil prices have held firm despite heavy supply (Speculation? You think?) The fall in supply and the rise in demand will surely shoot prices higher, despite Libya's announcement that it will boost oil production capacity from the current 1.8 million barrels per day to three million barrels per day by 2013. It's a drop in the world's oil bucket, Libya.

OCTOBER OIL on the NYMEX:

The market moved fairly steadily up almost from the open but the news that seemed to keep it happy was the 1:00 p.m. release of the Housing Market Index from the National Association of Home Builders. It's a fairly comprehensive survey which shows how Association members perceive present and expected sales of new homes and prospective new-home-buyer traffic.

September showed the third straight gain for the index -- up one point to 19 with strength in current single-family purchases. Traffic was up, too. The single-family component of the housing starts report, by the way, is on a five-month roll. Home builder stocks were strong, gappng up at the open and staying up; Lennar, for example:

LENNAR CORP.:

So today's take-home is: We certainly seem from all reports to be coming out of the recession. Just maybe . . . the market is getting ahead of itself and is due for a pullback. Still worth buying on dips? Yes, with stops in place, as always. Commodities, metals, industrials, some tech, some financials often thrive in this part of the cycle.

You know, I couldn't tell you why, but every so often the party of the second part at my house goes through phases of absolutely maniacal online buying (in which he has a lot in common with his mother-in-law, who thinks he's the greatest thing since yogurt with fruit in it). Anyway, delivery times have been a major topic around here lately. Perhaps this touching graph will speak to you, too:


On tap tomorrow are housing starts and jobless claims, which could be movers, along with the EIA natural gas report and the Philadelphia Fed Survey.


New Option Plays

Racing Past Resistance

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Intl. Bus. Mach. - IBM - close: 121.82 chg: +2.47 stop: 117.75

Why We Like It:
It's taken more than six weeks but IBM has finally broken out over resistance at the $120 level. Volume was more than double the norm and the MACD on the daily chart has produced a new buy signal. I am suggesting readers buy calls on this breakout. Our first target to take profits is at $126.00. Our second target is $129.75. We will plan to exit ahead of IBM's earnings report in mid October.

Suggested Options:
I'm suggesting the October calls. My preference is the $125 strike.

BUY CALL OCT 120 IBM-JD open interest=19081 current ask $4.70
BUY CALL OCT 125 IBM-JE open interest= 8723 current ask $2.15
BUY CALL OCT 130 IBM-JF open interest= 6103 current ask $0.80

Annotated Chart:

Picked on September 16 at $121.82
Change since picked:       + 0.00
Earnings Date            10/15/09 (unconfirmed)
Average Daily Volume =        5.3 million  
Listed on September 16, 2009         



In Play Updates and Reviews

Take Profits Now!

by James Brown

Click here to email James Brown

The market's rally allowed seven of our plays to hit upside targets including one of our strangles.


CALL Play Updates

Alcon Inc. - ACL - close: 136.93 change: +2.16 stop: 129.49

ACL is looking stronger. I've been expecting a dip towards $132.00. Now I would consider small bullish positions right here. Our first target is $142.50. Our second target is $148.00.

Picked on September 10 at $136.75
Change since picked:       + 0.18
Earnings Date            10/21/09 (unconfirmed)
Average Daily Volume =        299 thousand 
Listed on September 10, 2009         


Allegheny Tech. - ATI - close: 35.67 change: +1.54 stop: 30.99 *new*

ATI continues to show strength with a 4.5% rally but the stock is also looking overbought. I am lowering our second target from $38.00 to $37.00. I'm raising our stop loss to $30.99.

Picked on   August 31 at $ 30.25 *triggered         
Change since picked:      + 5.42
                               /1st target hit @ 33.85 (+11.9%)
Earnings Date           10/21/09 (unconfirmed)
Average Daily Volume =       2.7 million  
Listed on August 27, 2009         


CF Industries - CF - close: 89.20 change: +1.32 stop: 83.49

CF appears to be breaking out from its recent sideways consolidation. Our first target to take profits is at $92.50. Our second target is $98.00. FYI: The P&F chart has a quadruple-top bullish breakout buy signal with a $99 target.

FYI: Agrium (AGU) is trying to buy CF but CF keeps rejecting the offer calling it too late. At the same time CF is trying to buy Terra Industries (TRA) and TRA keeps rejecting the offer calling it too low. Eventually one of these companies is going to give up or they're finally going to make a big enough offer or somebody else might step in and start bidding. There is a risk that someone bids too much and the market could think they overpaid, which might push the stock lower. This M&A dance has been going on for months and it will probably continue for months so I'm not expecting it to have much short-term impact on the stock. However, it's worth noting that CF recently filed a lawsuit to force TRA to hold their annual shareholder meeting. This way CF can try and vote some members onto the board of directors.

Picked on September 05 at $ 85.93
Change since picked:       + 3.27
Earnings Date            10/27/09 (unconfirmed)
Average Daily Volume =        653 thousand 
Listed on September 05, 2009         


Compass Minerals - CMP - close: 59.10 chg: +0.46 stop: 54.75

CMP has managed to close above short-term resistance at $59.00. Officially our first target to exit is $59.75. Our second and final target is $64.00. FYI: The Point & Figure chart has turned bullish with a $69 target.

Picked on September 03 at $ 55.55
Change since picked:       + 3.55
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        415 thousand 
Listed on September 02, 2009         


Danaher Corp. - DHR - close: 68.34 change: +0.41 stop: 62.95

Yesterday the rally in DHR hinted at a pull back. The stock has managed to close at a new relative high today. I am not suggesting new bullish positions at this time. Our first target is $69.50. The Point & Figure chart is bullish with a $77 target.

Currently we only have half a position open to limit our risk given the aggressive entry point.

Picked on September 05 at $ 66.37 (buy 1/2 position)
               /originally listed at $65.76, gap higher entry @ 66.37
Change since picked:       + 1.97
Earnings Date            10/15/09 (unconfirmed)
Average Daily Volume =        2.4 million  
Listed on September 05, 2009         


Diamond Offshore - DO - close: 96.85 change: +2.16 stop: 87.75

Another drop in the dollar helped boost crude oil and the oil service stocks rallied. DO gained 2.2% and closed over resistance in the $95-96 zone. The plan was to use small position sizes.

We will take some money off the table at $99.90 (1st target). Our second target is $104.50. More aggressive traders can aim for $110. The P&F chart is forecasting a $114 target.

Picked on September 15 at $ 94.69 *adjusted entry point
Change since picked:       + 2.16
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        1.8 million  
Listed on September 12, 2009         


Factset Research - FDS - close: 62.25 chg: +0.88 stop: 57.45 *new*

Target achieved. The two-week rally in FDS has been almost non stop and shares gained another 1.4%. The stock hit $62.27 this afternoon. Our first target to take profits was $62.00. I strongly recommend that readers consider taking money off the table if you have not done so. Our second and final target is $64.75 but I would seriously consider a complete exit right here. FDS looks that overbought. I'm raising our stop loss to $57.45.

Please note that FDS is due to report earnings on September 22nd and we'll plan to exit the day before the company announces.

Chart:

Picked on September 08 at $ 57.55
Change since picked:       + 4.70
                               /1st target hit @ 62.00 (+7.7%)
Earnings Date            09/22/09 (confirmed)
Average Daily Volume =        331 thousand 
Listed on September 05, 2009         


General Dynamic - GD - close: 63.29 change: +0.16 stop: 57.85

GD is still struggling with resistance near $63.50. Our plan is to buy calls on a dip at $61.00.

Our first target is $64.90. Our second target is $69.00. Investors with a longer-term time frame may want to aim a lot higher. GD has produced an inverse H&S pattern that is forecasting an $85

Picked on September xx at $ xx.xx <-- TRIGGER @ 61.00
Change since picked:       + 0.00
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        2.3 million  
Listed on September 09, 2009         


Goldman Sachs - GS - close: 179.87 change: +3.21 stop: 166.45 *new*

Target achieved. GS has rallied to another new 2009 high and closed at its highs for the session. Our first target to take profits was at $179.00. I am raising our stop loss to $166.45. I am not suggesting new bullish positions at this time. Our second and final target is $184.00. The $185-190 zone looks like potential resistance.

FYI: The Point & Figure chart is bullish with a $228 target. Remember, we want to trade small position sizes.

Chart:

Picked on September 8 at $166.75
Change since picked:      +13.12
                             /1st target hit @ 179.00 (+7.3%)
Earnings Date           10/13/09 (unconfirmed)
Average Daily Volume =       8.8 million  
Listed on August 29, 2009         


Genesse & Wyoming - GWR - close: 32.45 change: -0.05 stop: 28.90

The railroad stocks are under performing the market. I am suggesting readers take profits right here right now. We can keep a fraction of our position open and aim for the second target at $34.75.

FYI: We want to use small position sizes to limit our risk.

Chart:

Picked on   August 15 at $ 28.66 /gap down entry
                               /originally listed at $29.30
Change since picked:      + 3.79
                              /take profits 09/16/09 @ 32.45 (+13.2%)
Earnings Date           11/03/09 (unconfirmed)
Average Daily Volume =       230 thousand
Listed on August 15, 2009         


Grainger W.W. - GWW - close: 90.79 change: +1.56 stop: 87.40 *new*

GWW has finally broken out above resistance at $90.00 and provided us a new entry point on the move over $90.35. I am raising our stop loss to $87.40. Our first target is $93.50. Our second target is $97.50.

Picked on September 1 at $ 86.00 *triggered  
Change since picked:      + 4.79
Earnings Date           10/14/09 (unconfirmed)
Average Daily Volume =       635 thousand 
Listed on August 22, 2009         


iShares Financials - IYF - close: 53.92 change: +1.69 stop: 49.49

Money came rushing into the banking stocks when fund managers feared they would run away from them. The IYF surged to new 2009 highs. Our first target is $57.00. Our second target is $60.00.

Picked on September 15 at $ 52.60 *triggered  
Change since picked:       + 1.32
Earnings Date            00/00/00
Average Daily Volume =        5.1 million  
Listed on September 01, 2009         


Mettler Toledo - MTD - close: 92.37 change: +1.16 stop: 86.95 *new*

MTD is also hitting new highs for the year. Readers may want to start taking profits now. Our first target is $93.50. I'm raising our stop loss to $86.95. Our second target is $99.00. I am labeling this an aggressive play because volume is pretty light for this stock.

Picked on   August 27 at $ 88.50 *triggered  (1/4 normal size)
Change since picked:      + 3.87
Earnings Date           11/05/09 (unconfirmed)
Average Daily Volume =       234 thousand 
Listed on August 22, 2009         


Occidental Petrol. - OXY - close: 79.15 change: +1.13 stop: 73.75 *new*

OXY is inching closer and closer to $80.00. More conservative traders may want to start taking profits now. I'm upping our stop loss to $73.75. Our second and final target is $79.85. More aggressive traders could aim for the $83-84 zone.

Picked on   August 27 at $ 72.00 *triggered         
Change since picked:      + 7.15
                    /1st target exceeded, gap higher @ 77.23 (+7.2%)
Earnings Date           10/28/09 (unconfirmed)
Average Daily Volume =       5.0 million  
Listed on August 26, 2009         


PPG Inds. Inc. - PPG - close: 59.89 change: +0.48 stop: 54.95 *new*

Target exceeded. PPG gapped open higher at $60.05. Our first target to take profits was at $59.80. Shares look short-term overbought and due for a dip. I'm raising our stop loss to $54.95. We still have a second target at $63.00. I am not suggesting new positions at this time.

Chart:

Picked on   August 28 at $ 55.65
Change since picked:      + 3.24
                             /1st target exceeded @ 60.05 (7.9%)
Earnings Date           10/27/09 (unconfirmed)
Average Daily Volume =       1.6 million  
Listed on August 27, 2009         


SPX Corp. - SPW - close: 63.45 change: +0.04 stop: 57.25

It's hard to go down with the market marching to new highs on a regular basis. I still don't want to chase this move in SPW so we wait for a dip to $60.50. If triggered our first target is $64.00. Our second target is $67.50.

Picked on September xx at $ xx.xx <-- TRIGGER @ 60.50
Change since picked:       + 0.00
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        570 thousand 
Listed on September 12, 2009         


SOHU.com Inc. - SOHU - close: 70.92 change: +2.19 stop: 63.25

This looks like a short squeeze in SOHU. The stock has now rallied past its June highs and potential resistance at $70.00. I am raising our trigger to buy the dip from $67.00 to $67.50.

Our first target is $72.50. Our second target is $77.00.

Picked on September xx at $ xx.xx <-- TRIGGER @ 67.50
Change since picked:       + 0.00
Earnings Date            10/26/09 (unconfirmed)
Average Daily Volume =        577 thousand 
Listed on September 15, 2009         


State Street (Bank) STT - close: 54.70 change: +1.52 stop: 49.45

STT has been lagging some of its peers. The banking indices and bank ETFs are hitting new 2009 highs. STT is still under resistance near $55.00.

Our first target is $55.00. Our second target is $59.80. Currently the Point & Figure chart is bullish with a $62 target.

Picked on   August 31 at $ 52.00 
Change since picked:      + 2.70
Earnings Date           10/13/09 (unconfirmed)
Average Daily Volume =       5.3 million  
Listed on August 19, 2009         


United Health - UNH - close: 29.29 change: +1.59 stop: 27.49

Healthcare stocks rallied with the market today. The Senate finance committee released their $856 billion version of a healthcare reform bill that did not have a government-run option in it.

Right now the plan is to buy calls on a breakout with a trigger at $30.55. If triggered our first target to take profits is $34.50. Our second target is $37.50. My time frame is about eight weeks once triggered.

Picked on   August xx at $ xx.xx <-- TRIGGER @ 30.55
Change since picked:      + 0.00
Earnings Date           10/20/09 (unconfirmed)
Average Daily Volume =       9.2 million  
Listed on August 29, 2009         


Union Pacific - UNP - close: 63.20 change: -0.41 stop: 59.40

The railroad stocks have been under performing the rest of the market. UNP still looks like it wants to run higher. However, I would start scaling out of bullish positions now. There are too many bullish candidates to tie our money up in a sector that's not moving. If we don't see a close over $64.00 tomorrow I'll probably cut UNP from the play list. Our first target is $69.00. FYI: The P&F chart is currently bullish with an $88 target.

Picked on September 09 at $ 63.00
Change since picked:       + 0.20
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        3.2 million  
Listed on September 05, 2009         


U.S. Oil Fund - USO - close: 37.43 change: +0.73 stop: 34.49

A bigger than expected draw down in oil inventories and more weakness in the dollar was enough to push crude oil and the USO higher. Our upside target is $39.95.

Picked on   August 31 at $ 36.50 
Change since picked:      + 0.93
Earnings Date           00/00/00
Average Daily Volume =      11.5 million  
Listed on August 15, 2009         


Waters Corp. - WAT - close: 54.81 change: +1.17 stop: 49.30

Fund managers are chasing performance and WAT is bouncing earlier than expected. I am raising our trigger to buy calls on WAT from $53.10 to $53.50. If triggered our first target is $59.50.

Picked on September xx at $ xx.xx <-- TRIGGER 53.50
Change since picked:       + 0.00
Earnings Date            10/20/09 (unconfirmed)
Average Daily Volume =        809 thousand 
Listed on September 12, 2009         


PUT Play Updates

*Currently we do not have any put play updates*


Strangle & Spread Play Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

Cigna Corp. - CI - close: 32.54 change: +1.15 stop: n/a

CI saw some weakness this morning but traders bought the dip near its rising 10-dma. The stock ended the session up 3.6% at a new 2009 high. I'm not suggesting new strangle positions at this time.

The options I suggested were the October $35 calls (CI-JG) and the October $25 puts (CI-VE). Our estimated cost was $1.20. We want to sell if either option hits $2.50 or higher. The closer we can open this trade to $30.00 the better.

Picked on September 08 at $ 29.40
Change since picked:       + 3.14
Earnings Date            11/05/09 (unconfirmed)
Average Daily Volume =        3.8 million  
Listed on September 08, 2009         


Research In Motion - RIMM - close: 84.16 chg: +1.02 stop: n/a

We have two days left before September options expire and the market looks overbought. I STRONGLY suggest readers consider taking profits right here! The September $80 calls hit $4.79 intraday and they're currently trading at $4.10/4.20 bid/ask. I'm not suggesting new positions at this time.

The options suggested were the September $80 calls (RFY-IP) and the September $70 puts (RFY-UN). Our estimated cost was $2.64. We want to sell if either option hits $5.00 or more.

Picked on   August 25 at $ 75.56
Change since picked:      + 8.60
Earnings Date           09/24/09 (confirmed)
Average Daily Volume =      11.7 million  
Listed on August 25, 2009         


CLOSED BULLISH PLAYS

Apple Inc. - AAPL - close: 181.87 change: +6.71 stop: 164.00

Target achieved. AAPL was a market leader today with the stock gapping open higher at $177.99 and shooting to $182.75 intraday. Our second and final target to take profits was at $179.00. The play is closed. I would keep AAPL on your watch list for a correction.

Chart:

Picked on   August 26 at $166.50 *(small positions 1/2 to 1/4)
Change since picked:      +12.50<-- 2nd target @ 179.00 (+7.5%)
                             /1st target hit @ 174.00 (+4.5%)
Earnings Date           10/21/09 (unconfirmed)
Average Daily Volume =        14 million  
Listed on August 25, 2009         


Newmarket Corp. - NEU - close: 91.91 change: +1.09 stop: 84.40

Target achieved. NEU rallied to $92.70 this afternoon. Our second and final target to exit was $92.50. I would keep NEU on your watch list for another opportunity should shares correct.

Chart:

Picked on   August 24 at $ 84.33 <- buy half now 8/24/09
                    /originally listed at $83.54, gapped higher @ 84.33
Change since picked:      + 8.17<--2nd target hit @ 92.50 (+9.6%)
                               /take profits @ 87.97 (+4.3%)

Picked on September 1 at $ 80.50 *triggered 2nd half
Change since picked:      +12.00<--2nd target hit @ 92.50 (+14.9%)
                               /take profits @ 87.97 (+9.2%)
Earnings Date           10/27/09 (unconfirmed)
Average Daily Volume =       141 thousand 
Listed on August 24, 2009         


CLOSED STRANGLE & SPREAD PLAYS

Schlumberger - SLB - close: 62.41 change: +2.58 stop: n/a

Target achieved. SLB rallied to new relative highs. The September $60 calls hit $2.70 this afternoon. Our plan was to exit if either option hit $2.50 or higher.

The options we suggested were the September $60.00 calls (SLB-IL) and the September $45.00 puts (SLB-UI). Our estimated cost is $1.00.

Chart:

Picked on   August 15 at $ 52.00 /gap down entry Aug. 17th
Change since picked:      +10.41
Earnings Date           10/15/09 (unconfirmed)
Average Daily Volume =       9.2 million  
Listed on August 15, 2009